The Infant Manufacturing Industry Argument on Tariff: the Nigeria Hypothetical Example

Abstract

This study was set to establish the fact that infant industries argument in favour of Nigerian manufacturing sector still holds. This is owing to its strategic importance in promoting the nation's economic growth. This study employed OLS method to analyse the secondary data obtained from Central Bank of Nigeria statistical bulletin from 1988-2010. The Regression result shows that tariff impacts positively on the growth of manufacturing sector while, inflation, interest rate and import impact negatively. Specifically, the analyses revealed that inefficiency in the manufacturing sector is mostly caused by high interest rate. Since tariff and import are insignificant determinants; Nigerian manufacturing sector can thrive in the presence of foreign competition if government can address more significant issues. It is on this note that we recommend a shift in attention to the provision of sound and effective economic policies as well as good management of the monetary sector as a way out of persistently high interest and inflationary rate problem. Improvement in the provision of physical infrastructure notably in the area of power supply will also be thought geared towards the right direction